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Hey, who needs a Democrat in the White House? President Bush continues to push wildly expansive Hillarycare for the housing market. Now, the administration has moved beyond the subprime crisis–and is touting government help for borrowers of mortages at prime rates. And that’s not all. In addition to bailing out subprime and prime rate borrowers, the Treasury Department is putting heat on Congress to increase the availability of jumbo mortgages and lift the $417,000 loan cap:

Treasury Secretary Henry Paulson said Tuesday the administration was exploring what would be a significant expansion of the program to help at-risk mortgage holders.

Paulson, in an interview on CNBC, said the administration was involved in discussions with the mortgage industry to expand a current program to freeze adjustable rate mortgages for five years to include borrowers of loans at prime rates. Currently, the rate freeze only covers a much smaller segment of adjustable rate loans, those made to subprime borrowers. Those are borrowers with weak credit histories. “One thing we will consider with the HOPE NOW alliance is … maybe expanding this beyond subprime borrowers to other borrowers,” Paulson said in the CNBC interview.

Paulson did not provide any details on when this expansion might go forward. The HOPE NOW alliance is a coalition of mortgage industry companies which are seeking to reach at-risk borrowers to help them avoid foreclosures. The administration last month unveiled its most significant move to date to deal with the mortgage crisis when it brokered an agreement with the mortgage industry to freeze rates on certain subprime mortgages for five years in an effort to help homeowners in danger of losing their homes when their lower introductory rates reset to sharply higher levels in the coming two years.

There are 1.8 million subprime mortgages that are scheduled to reset to higher rates this year and in 2009.

Paulson in the CNBC interview also called on Congress to quickly pass pending legislation that would reform the Federal Housing Administration, which he said would help 250,000 at-risk homeowners who have adjustable rate subprime mortgages refinance to more affordable loans and another piece of legislation that would expand the availability of so-called “jumbo” mortgages, loans higher than $417,000.

The two giant government-sponsored mortgage companies, Fannie Mae and Freddie Mac, cannot presently back these jumbo loans, which restricts their availability.

Meanwhile, Baltimore’s mayor is milking the subprime meltdown and doing her best Jesse Jackson imitation. Sheila Dixon announced that Charm City is suing Wells Fargo over alleged racial discrimination in lending:

Hundreds of foreclosed homes in black neighborhoods resulting in millions of dollars of tax losses are the result of predatory lending, argues a federal lawsuit to be filed today by Baltimore City against one of the country’s largest mortgage lenders.

The lawsuit accuses Wells Fargo Bank of targeting black homeowners in Baltimore with high-interest loans and deceptive lending practices, costing the city millions in tax dollars and resulting in one of the highest foreclosure rates of any lender in the city.

“We can make the case that African-American homeowners were targeted by Wells Fargo with inferior mortgage products, and we have evidence that some of this practice may be illegal,” Sterling Clifford, spokesman for Mayor Sheila Dixon, said Monday.

Citing “reverse redlining,” the suit alleges the bank targets black neighborhoods. The practice resulted in a foreclosure rate for the bank four times higher in the city’s predominantly black neighborhoods compared to white neighborhoods, the suit alleges.

As I’ve said before, the subprime mess isn’t a result of ruthless discrimination. If anything, it’s the result of too little discrimination by lenders too willing and eager to sign on people who had no business taking on mortgages.

Propping up bad loan prospects will only yield more bad loan prospects.